Monday, September 16, 2013

SPX Daily Chart Gap Fill Standard Deviation Bands

There was one tiny gap (blue circle) remaining above at 1707 and that will likely be filled with the S&P futures up +20 this morning on Summers withdrawing from the Fed race. There are many gaps below. Price was already at the upper standard deviation band (pink line) and should pierce up through the upper band this morning. This sets up the expectation for a move back to the middle band, the 20-day MA at 1565.51, as time moves forward.  The SPX all-time intraday and closing high is 1709.67 from 8/2/13.

The brown lines show a sideways channel through 1627-1710 where price will test the upper rail today. The indicators were negatively diverging (short red lines) except for the MACD line that wanted further price buoyancy, but the Summers news causes shorts to panic, spiking markets higher, creating momo, so the chart will have to reset over the next couple days to absorb the news. The thin red lines are very important for the indicators since SPX price is going to print at the same or greater highs as early August. Market bears want the indicators to stay below the thin red lines to create negative divergence which will send price lower again in the days ahead. Market bulls want to see the indicators explode up through the thin red lines to indicate a more sustainable rally that may last a few weeks. Note that the stochastics are already firmly overbot and have no higher to go; so the stochastics will set up with negative divergence. The bulls are running to begin the new week of trading. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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